The Action Learning Way

Daniel N. McGrath, Vice President, Corporate Strategy, IBM Corporation leads
a major strategic change initiative called the Strategic Leadership Forum (SLF) at IBM. Developed along with the Harvard Business School, this initiative is an approach to strategy that directly engages line business leaders in a real process of sensing the environment, and seizing new business opportunities. This new approach emphasises on the interdependence between strategy and execution, and has paved the way for IBM’s transformation into a successful business solutions provider.

The CEE at the ISB in its continuous search and support for innovative pedagogy from world class institutions, invited Mc Garth to share his insights about IBM’s ‘action learning approach’ in building strategic leadership skills. ‘Good strategy, of course, involves market intelligence, imagination and good financial analytics, but above all the practice of crafting strategy is profoundly social,’ he says.

No one would debate the fact that executives, particularly General Managers, need critical skills in the area of strategic thinking and leadership. But too easily, the operational focus of everyday work can crowd out strategic thinking. Moreover, the annual planning cycle followed by many businesses, can easily become a delegated staff exercise, focused on creating a strategy document rather than allowing senior executives to become personally engaged in clarifying customer needs, recognising new competitive dynamics or intensively exploring alternative business designs. The result is not only weak strategy, but executives who fail to develop strategic skills or practice strategic leadership.

At IBM, we recognised this pattern about a decade ago and adopted an ‘action learning’ approach to building strategic leadership skills. This is done by focusing less on strategy calendars and documents, and more on the changing portfolio of the strategic issues which are addressed year round.

At the most senior level of the business, our Strategy Team (comprising the Chairman, SVP Strategy and about twelve other senior executives) meets every month for four and a half hours, to explore a selected two or three issues in depth. While the dates for these meetings are set well in advance, specific issues are slotted into the calendar as business needs dictate. Before its review with the Strategy Team, each issue is carefully framed and explored by a project team, led by an executive whose business is significantly impacted by the issue.
IBM’s Corporate Strategy group provides guidance on appropriate methods, but the project staffing is almost entirely provided by line units. The General Managers, who lead these projects, have had an opportunity to develop and demonstrate their strategic skills. By the close of a year, about 30 strategic issues have been addressed in a disciplined way. The relevance and value of strategic thinking becomes clear to all participants, and they are exposed to systematic strategic thinking.

Good strategy, of course, involves market intelligence, imagination and good financial analytics. But in the process of approaching strategy in this issue-focussed way, we learnt something unexpected - that the practice of crafting strategy is profoundly social. Each participant on a strategy project team brings a partial insight into the nature of the strategic issue. Their individual perceptions reflect their particular business unit and their own career history. Of course, at the start, they believe they see the issue objectively and largely in total. But while systematically working through the strategic issue with their project colleagues, they come to recognise that the issue was multi-faceted, and that the best solution requires combining partial insights from team members, clients and business partners. This social aspect of crafting strategy is nowhere more evident than in IBM’s SLFs, where we address significant business issues that span multiple business units.
Think of an intensive and very structured three and a half days executive workout that begins with a clear formulation of the issue, stated as a performance or opportunity gap, and then marries considerations of both strategy and execution, leading to a clear and mutually committed action plan for closing that gap. Over the last eight years, IBM has conducted SLFs for over 130 teams and involved 2,500 executive participants, each SLF addressing some distinct issue.

Today, we think of SLFs as a means of addressing strategic issues, but it didn’t begin that way. When we were looking for approaches to building executive strategic leadership skills, we considered traditional executive education, but we had two concerns-

• In the past, when our executives had attended such programs individually, the skills taught didn’t stick. We suspect that as their colleagues had not attended the same programme, socialising the better thinking became impractical.
• While case studies were instructive, they didn’t hit home the way dealing with an actual IBM issue would.

Finally, we developed the SLF in cooperation with Harvard Business School Our ideas evolved rapidly. Rather than sending individuals, we elected to send whole teams together – often cross-functional teams. And while case studies would figure in the teaching portion, we would spend 17 hours at the SLF in team break-outs addressing a real and pressing IBM issue. As our base framework, we made significant adaptations to an existing programme, 'Leading Change and Organisational Renewal (LCOR)’, taught by Professor Mike Tushman, HBS, and Professor Charles O’Reilly, Stanford Graduate School of Business.

While we’ve long been satisfied with the way the SLF helped us to resolve significant strategic issues, we’ve since gone back with Professor Tushman to examine just how effective the programme was in building strategic skills. What we found was that the SLF was superior to any version of the LCOR programme – whether it is involving open enrolments or business teams attending together.

We see the SLF as action learning on steroids. It’s become a significant tool in IBM’s strategy kit bag, and has reinforced our belief that strategy is best , not as an annual plan cycle or a document, but rather as a vital and remarkably year-round process focused on strategic issues of a business.

For more information about this unique pedagogy, contact Saugata_nandi@isb.edu